Tuesday, September 25, 2012

The need for regulation in the Indian Realty sector

The Indian realty sector has witnessed massive boom in the last decade or two. This boom has been led by the private players who have developed varied residential, commercial, recreational and other projects. While the basic aim has been to provide affordable housing options to the huge middle class of India, the way the development has progressed, that aim still seems to be far fetched. The realty sector players have largely had their way in the determination of the prices and charging the customers on various pretexts, delays in project completion, non-payment of compensations to people and for a number of other reasons.The regulation of the realty sector has now become very important in the wake of large number of complaints being received against these builders. Though the regulation is aimed at the builders, making them adopt fair trade practices, the builders shall welcome the formation of regulator.

For one, the establishment of the office of the regulator will ensure that the builders work as per the policies and the rules laid down. So, there will someone who would put ensure that the builders do not have their own say and that the objectives of the government policies are duly met. This augurs good for those builders such as Piyush Heights Faridabad who largely have a local presence and who face stiff competition from the bigger players. Secondly, there will be a greater level of transparency in the realty dealings. The builders will have to disclose all their plans and the information about the project before its launch. So, the customers too would be able to gauge what the builders are promising and even the other builders would be able to having a level playing field.

Some of the unscrupulous builders develop inferior quality projects just to make these cheaper than the competitors and sell these easily to price-sensitive customers. Due to this substandard construction, the players like Piyush Heights might suffer. This regulation will help the builders to clearly know what quality of construction is expected of them. So, the ones who take advantage of substandard materials to deliver the project at lesser prices would be brought to book.

There will be clarity on many aspects of the real estate business which will help the builders to determine the course to be taken about which there is no policy framework. Right now, different builders tend to have different stances on many aspects of real-estate business which will get better regulated once this regulator is established.

There are good chances that the vested interests in the realty sector would not like to be bound by the directions of the regulator and there will expectedly be opposition of this measure. However, this step holds benefits for all the stakeholders, be it the customers or builders.